NVCA’s 4-Pillar Plan to Restore Liquidity in the U.S. Venture Capital Industry

The NVCA has just released a four-pillared plan to help revive the venture-backed IPO market.  Their argument is that the cause of the current dearth in companies going public lies beyond the severe economic downturn, and that certain systematic issues (such as Sarbanes-Oxley, the Spitzer Decree, etc.) are playing a larger role in creating these doldrums.  In reality though, I think it’s a combination of the two. While yes, they’re right in pointing out regulatory problems, one can’t overlook the simple fact that a severe recession is bad for a company looking to IPO.  

The plan brings up some excellent points and I particularly liked their emphasis on the VC “ecosystem”. Many of the boutique’s present in the 1990’s have disappeared and the playing field of advisory services is more homogeneous than before. The under $50 million IPO has become a rarity (though I think this has just as much to do with some VCs trying to hold off for a bigger payday as it does with large I-Banks and a lack of small-cap sellside analysts), and I was surprised that law firms weren’t touched on. Of all the advisory costs for small companies, legal fees are the ones that have risen the most over the past ten years.  I also think that the new private market platforms (such as InsideVenture, SecondMarket, etc.) will be an interesting space to watch develop over the next few years.

Anyway, here’s the presentation.

And the press release:

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